SCCR/20/2 Rev
2
E
SCCR/20/2 Rev
OriGINAL: English
DATE : May 10, 2010
Standing Committee on Copyright and Related Rights
Twentieth Session
Geneva, June 21 to 24, 2010
Study on the Socioeconomic Dimension of the
Unauthorized Use of Signals – Part II:
Unauthorized Access To Broadcast Content –
Cause And Effects: A Global Overview
prepared by Screen Digest, London*
* The views and opinions expressed in this Study are the sole responsibility of the author. The Study is not intended to reflect the views of the Member States or the Secretariat of WIPO.
TABLE OF CONTENTS
TYPES OF UNAUTHORIZED ACCESS 5
Physical piracy 5
Hardware based unauthorized access 5
Unauthorized re-broadcasting of signals 5
Extra‑territorial TV access (grey market) 5
UNAUTHORIZED ACCESS – A REGIONAL VIEW 6
North America 6
Latin America 6
Asia 7
Europe 7
Africa 8
Middle East 8
ACCESS BARRIERS AND CAUSES OF PIRACY 9
Consumer and industry barriers 9
Content exclusivity and competition 9
Policy and regulatory barriers 10
Non-availability of content 10
Content regulation 10
METHODOLOGY 10
GENERAL OVERVIEW AND DESCRIPTION 11
UNAUTHORIZED ACCESS – THE DIFFERENT TYPES 12
Physical Piracy 12
Commercial Piracy 14
Personal viewing and home copying 15
HARDWARE-BASED UNAUTHORIZED ACCESS 16
Unauthorized Re-broadcast of Signals 19
Extra-territorial TV Access 20
Online Piracy 22
GLOBAL IMPACT OF UNAUTHORIZED SIGNAL ACCESS 26
Rights owners 26
Investment in content production, technology, innovation 27
Jobs 28
Government taxes, revenue 28
Organized crime, social unrest 28
THE IMPACT OF UNAUTHORIZED SIGNAL ACCESS – A REGIONAL VIEW 29
North America 29
Latin America 33
Asia 38
EUROPE (WESTERN AND CEE) 44
Africa 51
Middle East 55
CAUSES OF UNAUTHORIZED ACCESS AND PIRACY 59
Enablers 59
ACCESS BARRIERS – A REGIONAL VIEW 63
North America 63
Latin America 66
Asia 69
Europe (Western and CEE) 72
Africa 75
Middle East 78
SOURCES 80
GLOSSARY 81
TABLE OF FIGURES
Fig. 1: Peer‑2‑PeerF (P2P) Networks – How BitTorrent Works 23
Fig. 2: Centralized Server-based Network 24
Fig. 4: North America Overview 32
Fig. 5: Latin America Overview 36
Fig. 6: Asia Overview 43
Fig. 7: Europe Overview 49
Fig. 8: Africa Overview 54
Fig. 9: Middle East Overview 58
Fig. 10 Basic pay TV subscription cost € 84
Fig. 11 Premium pay TV subscription cost € 85
Fig. 12 Basic pay TV subscription cost as a % of per capita GDP 86
Fig. 13 Premium Pay TV subscription cost as a % of per capita GDP 87
Fig. 14 Average Hardware/Installation costs as a % of per capita GDP 88
Fig. 15 Pay‑TV Penetration 89
Fig. 16 Worldwide Pay‑TV Subscribers (YE 2008) 89
TABLE OF SUMMARIES
Tab. 1 Physical Piracy – Key Points 12
Tab. 2 Hardware-based Unauthorized Access – Key Points 16
Tab. 3 Unauthorized re-broadcast of signals – Key Points 19
Tab. 4 Extra-territorial TV access – Key Points 20
Tab. 5 Online Piracy – Key Points 22
Tab. 6 North America – Summary of Key Issues 29
Tab. 7 Latin America – Summary of Key Issues 33
Tab. 8 Asia – Summary of Key Issues 38
Tab. 9 Europe – Summary of Key Issues 44
Tab. 10 Africa – Summary of Key Issues 51
Tab. 11 Middle East – Summary of Key Issues 55
Tab. 13 Access Barriers – North America Summary 63
Tab. 14 Access Barriers – Latin America Summary 66
Tab. 15 Access Barriers – Asia Summary 69
Tab. 16 Access Barriers – Europe Summary 72
Tab. 17 Access Barriers – Africa Summary 75
Tab. 18 Access Barriers – Middle East Summary 78
Tab. 19: Piracy Estimate Source Methodology 90
Tab. 20: The Evolution of Bit Torrent 93
TYPES OF UNAUTHORIZED ACCESS
Physical piracy
Physical piracy has grown increasingly sophisticated over the years, having moved from formats such as VHS to DVD, and lately Blu Ray Discs (BD). Commercial physical piracy has increased in the last five to ten years, attributed to the combination of a range of factors, such as the introduction of optical disk formats; increasing penetration of playback hardware; consistent drop in both prices of blank recordable media and packaged original software. Unauthorized personal viewing/home copying is said to account for merely three per cent of total physical piracy in 2007, having remained static from the previous year, although recent estimates from the U.K indicate that losses to the industry from non‑commercial physical piracy may be higher than previously understood.
Hardware based unauthorized access
Hardware based unauthorized access can be described as access that is facilitated through the use of specific equipment that enables the circumvention of security measures such as set top boxes (STB), conditional access systems (CAS) and smart cards. Similarly to physical piracy, hardware-based access is also carried out on different levels, both commercial and personal. In numerous cases, circumvention of CA systems is carried out by TV enthusiasts who take it up as a challenge. However, there is a second group for whom this is a commercial business. This group circumvents CAS and then market boxes and hacked smart cards to consumers for a fee. The monetary impact of hardware based unauthorized access is ‘impossible to evaluate’, according to AEPOC – the European anti piracy association, but it estimates that approximately €1bn is spent every year in the EU on pirated cards and STBs.
Unauthorized re-broadcasting of signals
Unauthorized re-broadcasting of signals involves redistribution of broadcast signals without the express consent or knowledge of the rights holder. The re-transmission of broadcast signals is almost always carried out on a commercial basis. This form of piracy is commonly seen in regions where regulations governing such re-transmission are deficient or the enforcement of existing regulations are lax, and is commonly seen in developing markets (parts of Asia, Africa, Middle East). CASBAA (Cable and Satellite Broadcasting Association of Asia), in its 2008 report on piracy, estimated that losses to the industry and the TV value chain (including government bodies) from illegal distributors was in the range of $365m – making unauthorized re-broadcasting one of the most significant forms of unauthorized access and piracy in the Asia Pacific region.
Extra‑territorial TV access (grey market)
Since content rights are often sold on a territorial basis and for varying amounts, pay‑TV operators and rights holders may see the access of signals from outside their region as potentially undermining their business case. This type of access is mainly limited to satellite TV, and in some cases, terrestrial signals, due to the inability to place specific restrictions on where the signals are transmitted. Grey market access has been less common in the past, but with national borders becoming more and more porous and the free movement of people and goods, it has started to become increasingly prevalent. It is worth noting that regulations governing grey market access vary significantly from country to country. For instance, extra territorial access of signals is deemed explicitly illegal in many parts of Asia and the Middle East, while being considered a contractual violation in others. In Asia, industry-wide losses from extra territorial access in 2008 (resulting from satellite overspill) were estimated to be in the region of $17m – less than 10 per cent of the total estimated losses from unauthorized access/piracy.
Online piracy
Digitization of content and growing internet penetration has resulted in online piracy starting to become a much more serious threat than other forms of piracy in many developed markets. Peer-to-peer (P2P) file-sharing remains popular due to the availability of a wide range of content; however, browser-based services such as YouTube have simplified the way content can be watched online, enabling a larger proportion of the population to gain access to video content online. Moreover, viewers are often unaware that the content they are watching is infringing copyright laws, and further feeds into the belief that online content is free.
UNAUTHORIZED ACCESS – A REGIONAL VIEW
North America
Unauthorized access of broadcast signals in North America has its origins in the theft of analogue cable signals - known as ‘splicing’. Digital cable and satellite TV theft in the US and Canada are known to primarily take place through the use of cable ‘black boxes’ and modified FTA boxes which circumvent CAS. Canada’s CASST (Coalition Against Satellite Signal Theft) estimated that that there were close to 750,000 illegal pay‑TV users in Canada in 2004 – costing the industry approximately $400m in lost revenues.
Online piracy is by far currently the biggest concern for rights owners. High broadband penetration levels in both US and Canada have resulted in piracy becoming more commonplace. All forms of online piracy exist in the US and Canada, although stakeholders believe that browser based services are not as popular as P2P. This lack of popularity in illegal browser based services for full length TV shows is a direct result of broadcasters making available their content for free online.
Latin America
Physical piracy remains the most common form of piracy seen. However, its impact is primarily on the movie and music industries – and increases in illegal optical disk manufacturing centers and import of vast quantities of optical disks have gone largely unchecked. Argentina and Brazil have only in recent years started handing out custodial sentences to street vendors of pirated DVDs, and local authorities accept that tracking pirate DVD manufacturers is difficult. The tri-border region between Brazil, Argentina and Paraguay is known to be the main entry point for pirated goods heading into Brazil –the largest commercial market in South America.
Unauthorized access of broadcast signals in South America is either hardware based (illegal access to cable and satellite via CA circumvention and/or analogue cable theft) or unauthorized distribution of content by local cable operators. In Argentina, it was estimated that there were approximately 1m illegal cable subscribers in 2003. As a result, two of the country’s biggest cable operators have since stopped distributing their premium sports and movie channels in analogue, and only offer them to their digital subscribers. Unconfirmed local press reports state that only 10 per cent of Ecuador’s cable TV subscribers are legally obtaining services.
Internet piracy is also of some concern in the region, with Brazil and Argentina taking centre stage. With over 20 and 28 per cent internet penetration, downloading of broadcast content is already occurring.
Asia
Within the Asia-Pacific countries, types of illegal broadcast signal access vary according to the economic and technological development. In developed countries like Hong Kong and Japan, higher broadband penetration levels are key causes for online piracy. China, despite low broadband penetration levels, has over 87m households connected to the Internet. As a result, online piracy has now reached significant levels in China.
Other forms of illegal signal access prevalent in developed regions are hardware based (Hong Kong, Taiwan, Thailand and Southern China) and, to some extent, grey market. Hong Kong is especially prone to grey market access due its large expatriate population and regulations governing satellite signal access. Moreover, its close proximity to China has resulted in significant inflows of hardware capable of being modified for CA circumvention. Despite Chinese laws prohibiting reception of satellite TV, southern China is said to have close to 10m homes receiving signals from neighbouring Hong Kong and Taiwan – either via the grey market route or through CA circumvention. Vietnam also has laws preventing private ownership of satellite equipment. But industry bodies estimate that close to 100,000 satellite systems exist in northern Vietnam – again having obtained hardware from China.
In India, Philippines and Thailand, illegal redistribution has been primarily carried out by local cable operators, who distribute selected content and programming (e.g., sport, movie channels) via their analogue networks. India and Philippines’ prime source of illegal signal access has also been the analogue cable networks run by local operators, who tend to declare only a small per cent of their actual subscriber base to rights owners and government. CASBAA estimated that industry losses from under-declaration in India were $1.1bn in 2008, while total losses from unauthorized access and piracy for Asia were $1.7bn in the same period.
Europe
All the different types of unauthorized signal access are witnessed in some form or the other in the more developed regions of Europe. Analogue cable signal theft has become relatively low due to digitization of networks, relatively cheap access prices, or provision of services as part of housing agreement/apartment rent. Enactment of the EU directive on CA circumvention (CAD) in several European nations has resulted in some success in curbing hardware based unauthorized signal access. In several European countries it is now illegal to sell, advertise or own CA circumvention devices.
With increasing broadband penetration, pay-TV pirates have now shifted their focus online. P2P protocol BitTorrent is popular. Sites offering free browser based access to content have also become increasingly popular in Europe. Increases in broadband speeds combined with digitization of content have resulted in in-browser accessibility of near-broadcast quality content – further encouraging consumers to shift their viewing to online sources.
Hardware based unauthorized access remains the key form of broadcast signal piracy in CEE (Central and Eastern Europe) countries like Poland, Czech Republic, and while in Russia and Ukraine, TV distribution is mainly via analogue cable - facilitating signal theft. Online piracy has started to become a key concern in these countries due to growing broadband penetration and lax regulations and enforcement governing online piracy.
Africa
Physical piracy remains the predominant form of unauthorized access and piracy in Africa. SAFACT (South African Federation Against Copyright Theft) estimated that in 2005, over 50 per cent of DVDs sold in the country were pirated – up from 10 per cent in 2001. Nigeria is said to have similar levels of piracy, while neighbouring Burkina Faso and the Ivory Coast’s pirate DVD markets are said to account for as much as 70-80 per cent of all DVDs sold. Within this segment, movies occupy a significant majority. Following Burkina Faso’s concerted efforts to quell piracy, industry sources claimed that counterfeited product not available in the country was being imported from Nigeria.
Hardware based and illegal broadcasting of pay‑TV signals are the most common form of unauthorized access of broadcast signals. Pay‑TV operators Multichoice and Orbit/Showtime estimate that the number of illegal subscribers viewing their services could be several times higher than the legal ones. In a bid to clamp down on pirate viewers, MENA pay-TV operator ART has recently begun to swap out its CA systems, in time for the 2010 football World Cup.
A unique form of unauthorized pay‑TV access in Africa is public airing of content in ‘viewing centres’. Due to the expensive nature of pay‑TV, illegal viewing centres that air big ticket sports events like the English Premier League football have become increasingly prevalent. Online piracy is yet to become a major threat due to the relatively low levels of broadband penetration.